2017 RANKING & REVIEWS
THE BEST SUBPRIME MORTGAGE LENDERS FOR BAD CREDIT
Finding Mortgages for Bad Credit | Top 6 Subprime Mortgage Lenders for Bad Credit Mortgage Loans
Before gaining an in-depth understanding of the options available to you to obtain a mortgage with bad credit and to learn about the top subprime mortgage lenders, it’s first important to understand the requirements of a conventional mortgage.
In today’s marketplace, the minimum requirements for obtaining a conventional mortgage are relatively rigorous. For borrowers who want the most favorable interest rates on a mortgage, it’s advisable to maintain at least a credit score of 720.
Also important in deciding whether or not a consumer qualifies for a mortgage is an individual’s debt-to-income ratio. Lenders will consider the total monthly debt of the loan applicant as compared to his/her income. Banks and lenders will typically require the applicant’s debt be no more than 36% of his/her gross monthly income.
So if you don’t meet these standards, does that mean you won’t be able to buy a home?
Don't Miss: Mortgage Rates/Loans Available to You
There are options to obtain mortgages for bad credit from bad credit mortgage lenders.
Called subprime mortgages, these poor credit home loans are designed to offer homeownership opportunities to consumers whose credit score may not meet the minimum standard of a traditional lender or who might have a higher debt-to-income ratio.
It's not uncommon for subprime mortgage lenders to offer these options, and, according to the Equifax National Consumer Credit Trends Report, first-mortgage originations for subprime borrowers with an Equifax Risk Score of 620 or less have grown. From January to October 2015, bad credit mortgage loan originations rose 28%.
The following subprime mortgage lenders list highlights some of the best options to obtain a mortgage for a bad credit first-time buyer or a bad credit mortgage in general.
In addition to subprime mortgage lenders and direct poor credit mortgage lenders, this list also includes some names, such as Home Loans For All, which are not direct bad credit mortgage lenders but instead serve as a portal to connect borrowers to possible lenders.
List of the Top Rated Best Subprime Mortgage Lenders
- Carrington Mortgage Services
- Home Loans For All
- Sebonic Financial
- The Lenders Network
This list is sorted alphabetically (click any of the above names to go directly to the detailed review for that bad credit mortgage lender).
Top Subprime Mortgage Lenders & Best Bad Credit Lending Companies | 2017 Comparison Ranking
Bad Credit Mortgage Lenders
Type of Coverage
Carrington Mortgage Services
Direct Lending and Mortgage Servicing
Home Loans For All
Find And Compare Mortgage Lenders
Direct National & Nonbank Mortgage Lender
|Direct Mortgage Lender|
Direct Mortgage Lender
The Lenders Network
|Find And Compare Mortgage Lenders|
Table: Top mortgage lenders and products for borrowers with bad or poor credit histories | 2017 Ranking and Comparison
Carrington Mortgage Services
Home Loans For All
The Lenders Network
What Is a Subprime Mortgage?
Before focusing on the best subprime mortgage lenders that offer bad credit mortgage loans, having a general concept of what a subprime mortgage is and how it differs from a conventional mortgage is important.
A subprime mortgage is offered by poor credit mortgage lenders, which often indicates it’s designed for borrowers with a score of less than 600.
These borrowers would be unlikely to qualify for a traditional mortgage, but since they are considered risky to the lender, subprime mortgage lenders will charge a higher interest rate. This is where the name “subprime” comes from because interest rates are above what’s considered a prime lending rate.
Interest rates offered on a bad credit mortgage can vary significantly and may be based on any number of factors that indicate the level of risk to the lender. These factors may include not just credit score but also the size of the down payment the borrower can provide, the late payments on his/her credit report, and the types of delinquent payments under the individual.
How Do Subprime Mortgages Work?
The process of obtaining mortgages for bad credit from subprime mortgage lenders is relatively similar to what you go through for a conventional mortgage. The primary difference is simply the interest rate the borrower will be charged.
Prime mortgage interest rates are those rates that are offered to customers that have excellent credit histories. Prime mortgages can be fixed or adjustable rate.
On the other hand, when working with poor credit mortgage lenders, consumers will often be required to get an adjustable-rate mortgage. Not only will the adjustable-rate subprime mortgage have a higher interest rate at the time it’s given, but that interest rate can also rise over time.
Before taking out a subprime mortgage, consumers should realize they may have other options. For example, some lenders may offer better terms than poor credit mortgage lenders, and there may also be government-backed options that could make homebuying an option for people with bad credit, including the FHA loan.
Before searching for subprime mortgage lenders, borrowers should explore all possible options to make sure they’re making the right decision.
The Pros and Cons of a Subprime Mortgage
As with most loan products, there are upsides and downsides to a subprime mortgage. The primary advantage of working with bad credit mortgage lenders is that there are opportunities for homeownership that wouldn’t ordinarily exist.
These borrowers then get the benefits that come with owning a home, which can help them improve their lifestyle and even strengthen their finances.
Homeownership helps people build equity which is key to building wealth.
At the same time, bad credit mortgage loans are expensive. In addition to having higher interest rates, they often include a range of penalties including for prepayment.
Also, if a borrower takes out an adjustable-rate mortgage, his/her monthly payment can increase significantly after the introductory period. It may be difficult for borrowers to make the payment, leading to foreclosure.
The most important thing a consumer can do when considering mortgage loans for bad credit is to research and understand the complexities of a loan.
Borrowers should also make sure they’re working with only reputable subprime mortgage lenders so that there aren’t hidden details, fees or penalties they aren’t aware of at the time of loan origination.
Methodology for Selecting the Subprime Mortgage Lenders
What methodology does AdvisoryHQ use in selecting and finalizing the companies, services, and products that are ranked on its various top rated lists?
Please click here to see “AdvisoryHQ's Ranking Methodologies,” a detailed review of AdvisoryHQ’s selection methodologies for ranking top rated companies, products, and services.
Detailed Review – Poor Credit Mortgage Lenders
After carefully considering bad credit mortgage lenders, we compiled the following list of the top six best subprime mortgage lenders. As you continue reading, you’ll find detailed reviews of each of our picks as well as an outline of the factors used in the decision-making process.
Carrington Mortgage Services Review
Carrington Mortgage Services is a mortgage company offering lending and mortgage services that has processed more than $10 billion in mortgages. Carrington also has an affiliated real estate brokerage company, and it works to help customers find the right loan products and terms and also walk them through the entire process.
The values of Carrington are based on integrity, transparency, and equity, and the mortgage professionals making up the Carrington team are licensed by federal and state authorities.
Key Factors That Enabled This to Rank as One of the Top Subprime Mortgage Lenders
Reasons Carrington is included on this list of the leading bad credit mortgage lenders offering poor credit home loans are cited below.
The Carrington Loan
In 2014, Carrington announced new initiatives it would be offering to help what it called underserved borrowers, and, as part of this, the signature Carrington Loan became available nationally.
The product is specifically designed for borrowers with FICO scores that are below 640. Features of this loan include no closing costs, appraisal fees or lending financing costs. Carrington pays all eligible loan costs as lender credits, and if unexpected costs come up, Carrington will cover them with credit.
This could include the title or escrow service charges from a title or settlement company.
In a press release from the company announcing national availability of The Carrington Loan, it stated that many borrowers still view the path to obtaining a mortgage as being complicated and unattainable. The release also said that this loan product strives to simplify that process as well as improve the experience.
Down Payment Assistance Programs
Along with looking for poor credit home loans, many borrowers may also be concerned about down payment requirements as a condition or potential barrier to homeownership. Carrington is an excellent choice, in terms of bad credit mortgage lenders, because it also offers services related to down payment assistance programs.
Carrington offers its Down Payment Assistance (DPA) programs to help homebuyers fund not only the down payment they’ll need to purchase a home but also the closing costs they may be required to pay. These programs are conducted in affiliation with state housing authorities.
Carrington has 53 approved DPA programs in 13 states, including California, Florida, Pennsylvania, and Georgia.
One of the ways Carrington excels as a leader among bad credit mortgage lenders is through its availability of the FHA loan. As mentioned at the start of this subprime mortgage lenders list, an FHA loan may be a valuable option for bad credit borrowers who don’t want to deal with the negative aspects associated with most bad credit mortgage loans.
The Federal Housing Administration provides loan programs that are specifically designed to make it easier to get a home loan, even with limited or bad credit, or a small down payment.
These loans, which are offered through Carrington, are for borrowers who might not otherwise qualify for a home loan, and the underwriting guidelines are more flexible than conventional mortgages.
Licensed Loan Officers
The process of applying for mortgages for bad credit can be even more overwhelming than the process for a conventional mortgage. That makes it important to work with qualified professionals who understand your needs and can provide honesty and transparency while offering the utmost of expertise.
All Carrington loan officers are state and SAFE Act-licensed and registered. All personnel are required to meet state and federal licensing requirements, so Carrington is always leading the way regarding federal and state changes that impact lenders and how they do business.
Carrington adapts quickly to regulatory changes and is always 100% compliant. It also emphasizes its dedication to protecting consumers and reducing fraud in the industry while remaining completely transparent.
Home Loans For All Review
Home Loans For All isn’t a direct lender but instead serves as a resource for consumers who are searching for mortgages for bad credit or subprime mortgage lenders that will work for them. Home Loans For All provides a simplified and streamlined way to compare a variety of loan and refinancing options with bad credit and offers a variety of tools that can help buyers as well.
Home Loans For All has a team of mortgage experts who are trained in helping consumers connect with bad credit mortgage lenders and in finding the most valuable poor credit home loans.
Key Factors That Led Us to Rank This as One of 2016’s Best Sources for Poor Credit Mortgage Lenders
Home Loans For All was included on this list of subprime mortgage lenders and resources for mortgages for bad credit for the following reasons.
Regardless of whether or not you’re searching specifically for bad credit mortgage loans or conventional home loans, it’s important to feel like you have plenty of options and the opportunity to compare products and find the one that’s right for your needs and will offer you the most favorable terms.
Home Loans For All isn’t a direct provider of mortgages for bad credit but instead lets borrowers compare home loan offers from multiple poor credit mortgage lenders in a matter of minutes.
Users are matched with the extensive network of poor credit mortgage lenders, and they can receive approval in just a few minutes.
Home Loans For All is unique because, in addition to providing a convenient way to access subprime mortgage lenders and receive offers quickly, this site also serves as a one-stop shop for all of your finance needs. It provides guides to credit repair which can help consumers make the necessary changes to qualify for a conventional loan instead of only poor credit home loans.
Home Loans For All will offer free, no-obligation credit consultations to clients, and these consultations include a free credit summary. The expert credit professionals can then help clients find the best solutions to their credit issues.
FHA 203(k) Loan
By visiting Home Loans For All, consumers can gain access to information and lenders who are authorized to offer the FHA 203(k) loan, which is designed to fund construction projects that would improve an existing property.
There are two versions of this FHA loan, which are the standard 203(k) and the streamline 203(k).
The FHA acts as an insurer for home loan lenders who offer the loan.
The streamline 203(k) requires fewer documentation demands than the standard 203(k), although the streamlined version of the loan has a maximum amount of $35,000 while the standard does not.
As mentioned, Home Loans For All is not just a resource to connect with poor credit mortgage lenders. It’s also an excellent resource for anyone who wants to understand the basics of credit and their options when it comes to buying a home. As part of that, it features tools, including a home loan affordability calculator, a mortgage calculator, and guides to mortgage negotiation.
Also available are free credit checks and direct access to HUD homes.
loanDepot strives to be an innovative non-bank mortgage lender with a platform based on technology and cutting-edge concepts. loanDepot was founded in 2010, and the principles guiding its operational philosophy include fair and ethical lending paired with excellent service and competitive rates.
loanDepot has more than 5,200 employees, and this includes over 1,700 licensed loan officers. loanDepot’s headquarters are located in Foothill Ranch, CA, and, in addition to the online platform, loanDepot also operates more than 150 national loan stores.
Key Factors That Enabled This to Rank As One of the Top Subprime Mortgage Lenders
When reviewing options consumers have for a bad credit mortgage, the following details highlight some of the reasons loanDepot was included on this subprime mortgage lenders list.
Beyond the diverse home loan products and bad credit mortgage options offered by loanDepot, it excels as a company in general because of its reliance on technology. loanDepot is working to change the traditional lending model through combining sound lending practices, efficient systems for lead delivery, and predictive data science.
The result is an effective and streamlined lending process, from origination through the service of the mortgage product.
During its six-year history, loanDepot has grown to become the second largest non-bank consumer lender in the country, and it’s the second largest non-bank retail mortgage lender, in large part because of its consumer-driven approach.
loanDepot is a provider of FHA loans which is a good option regarding mortgage loans for bad credit. These government-assisted loans serve as an alternative to a conventional mortgage for those who don’t have perfect credit. FHA mortgages are beneficial if you’re searching for a mortgage with bad credit because they have more flexibility regarding qualification requirements as well as rates which are currently low.
Approved borrowers can put down as little as 3.5% with an FHA loan, although they do include a mortgage insurance premium and monthly mortgage insurance.
This is an excellent way for homeownership to become a viable possibility for someone looking for a mortgage with bad credit, and it isn’t expensive compared to other mortgages for bad credit.
Also available from loanDepot is the Home Affordable Refinance Program (HARP). This program isn’t a mortgage for a bad credit first-time buyer but is instead a refinancing program available to underwater homeowners.
HARP is a federal program that helps underwater or almost underwater homeowners refinance their mortgage and take advantage of a lower rate if they’ve been current on their mortgage payments up to the point of application and approval.
This program saves hundreds of dollars a month on average and requires no equity, no private mortgage insurance, and no credit minimums.
As well as featuring options for consumers who need bad credit mortgage loans, loanDepot also features unique programs including its Lifetime Guarantee. This guarantee states that a consumer who refinances with loanDepot one time never has to pay lender or appraisal fees again.
Popular Article: Best Top Online Mortgage Lenders | Ranking & Reviews
This means that for the average consumer, who refinances a mortgage every seven years, he/she can save thousands in lender and appraisal fees each time.
Another exclusive program available to borrowers who work with loanDepot is the No Steering Policy. This ensures that the loan specialist won’t ever try to guide consumers toward a particular product for their own financial gain or the financial gain of the company.
This can be particularly advantageous for borrowers seeking mortgage loans for bad credit because they won’t have to worry about being pushed by their loan officer toward a loan with unfair terms or hidden fees.
LoanLeaders is a direct lender of a variety of mortgage products, including bad credit mortgage loans. The company offers expertise in many loan products, including FHA loans, VA loans, conforming loans, and specialized niche products. It also specializes in working with borrowers who are looking for poor credit home loans or who have faced challenges in the past.
The goal of LoanLeaders is to provide consumers with a loan that’s going to be beneficial to them and bring them value while also being appropriate for their particular circumstances. LoanLeaders is also unique on this subprime mortgage lenders list because it offers unique products that might not be offered by banks or credit unions.
Key Factors That Allowed This to Rank as One of 2016’s Best Subprime Mortgage Lenders
Key reasons LoanLeaders was included on this subprime mortgage lenders list are detailed below.
Trouble-Free Mortgage Loans
One way that LoanLeaders is unique is that it doesn’t just offer some options for borrowers seeking bad credit mortgages. Instead, it specializes in mortgages for bad credit. At the same time, LoanLeaders also focuses on providing what it calls “trouble-free mortgage loans.”
It works to simplify the entire process of finding and securing the loan that’s right for each individual client, and it offers quick turnaround times as well.
Once the mortgage consultation process is completed, the consumer will be offered options for several bad credit mortgage lenders and options they can review. All advice is unbiased and objective, ensuring that the borrower is connected with only the very best poor credit home loans.
Oftentimes, consumers face problems when trying to find a bad credit mortgage or bad credit mortgage lenders due to unfair treatment or because the loan officers try to push them toward a product that is too expensive, doesn’t meet their needs or has hidden fees or downsides.
LoanLeaders strives to avoid any and all situations that could make a borrower feel like he/she is being treated unfairly.
Even for those borrowers seeking mortgage loans for bad credit, LoanLeaders delivers the same level of support and service to every customer. Its mortgage bankers are accessible, and LoanLeaders is an equal housing lender.
No Closing Cost Loans
LoanLeaders is an excellent option for borrowers seeking the best subprime mortgage lenders because it specializes in thousands of loan products, many of which are aimed at consumers with less-than-perfect financial situations.
One of the unique loan options offered is the No Closing Cost Loan. This program is typically associated with refinancing mortgage loans as opposed to mortgages for bad credit first-time buyers. With the No Closing Cost Loan, existing homeowners can lower their monthly payments without closing costs, which often include underwriting and processing, title and escrow fees, country recording fees and more.
The closing costs are avoided by having the borrower pay a slightly higher interest rate, but he/she receives a rebate that pays the closing costs of the loan without upfront costs.
LoanLeaders features government-backed products that may be of interest to borrowers seeking mortgage loans for bad credit.
These include the FHA loan and the VA loan.
The federal government insures both, and they are easier to qualify for than conventional loans. With both, the borrower can finance more of the loan amount than he/she can with most traditional loans. FHA loans are ideal as a mortgage for a bad credit first-time buyer, and they also have low down payment requirements.
Sebonic Financial Review
Transforming home lending into an enjoyable experience is what Sebonic Financial strives for. Sebonic Financial is a startup that combines innovative ideas, rapid execution, and technology, yet it’s also backed by the resources of an established home loan lender.
Sebonic is part of Cardinal Finance Company, with a history going back to 1987, and is an approved Fannie Mae, Freddie Mac, and Ginnie May lender. It’s headquartered in Charlotte, NC.
Key Factors That Enabled Us to Rank This as One of 2016’s Best Mortgage Lenders for First-Time Buyers
Some of the factors that make Sebonic one of the best resources for bad credit mortgages are detailed in the following list.
One of the many reasons Sebonic is considered not only an excellent resource for borrowers seeking bad credit mortgage lenders but for mortgages in general is because of its reputation for providing excellent customer service.
If you read reviews left by actual customers of Sebonic, you’ll notice that they praise the company on its professionalism, knowledge, responsiveness, and overall level of service.
Many people find that Sebonic’s unique technology and focus on efficiency makes it a better option than a bank or credit union for those seeking mortgage loans for bad credit or any type of home loan product.
Collaboration and Customized Requirement Lists
Typically, whether you’re searching for poor credit mortgage lenders, mortgage loans for bad credit or even prime mortgages, it can be a challenging, complicated, and overwhelming experience. Too often, lenders don’t keep borrowers updated on what’s happening in the lending process, so they feel left in the dark and unsure of what’s expected from them next.
Sebonic strives to be unique, in that it not only offers a collaborative experience where the borrower is kept ahead of everything happening in the loan process, but it also provides customized document lists that highlight everything the borrower needs to provide.
This can be particularly important for borrowers seeking mortgage loans for bad credit because they may require special documentation or information to process their loan.
If you’re working to obtain a mortgage with bad credit, it can already be a difficult process. Sebonic doesn’t want to add stress to an already intimidating experience. It wants to make it an experience that’s simple and pleasant.
As part of this, Sebonic offers the opportunity to take advantage of lower closing costs, payments, and overall fees throughout the life of a loan.
Additionally, simplicity is essential to all the products and services offered by Sebonic. Each step of the process is explained as are borrower requirements and responsibilities, all with a focus on transparency, expediency, and honesty.
One of the primary reasons Sebonic was included on this subprime mortgage lenders list of the best options to obtain a bad credit mortgage is because of its government credentials. Along with being an approved seller and servicer for Fannie Mae, Freddie Mac, and Ginnie Mae, Sebonic is a division of Cardinal Financial Company, which is also an approved lender for the Department of Housing and Urban Development.
Additionally, Cardinal/Sebonic is an approved FHA and VA lender, with a direct endorsement from the FHA, and it is designated as a VA automatic lender authority.
Cardinal is also an authorized lender for the government’s USDA/Rural Housing Program.
The Lenders Network Review
The Lenders Network is not a direct bad credit mortgage lender but is instead a resource where consumers searching for mortgages for bad credit can go to compare products and have companies come to them. Users can compare multiple loan offers in a matter of minutes by completing a quick contact form.
The Lenders Network specializes in connecting borrowers with direct FHA lenders as well as FHA refinancers, which is ideal if you’re searching for poor credit home loans or a mortgage with bad credit.
Key Factors That Enabled Us to Rank This as One of This Year’s Leading Tools to Find Bad Credit Mortgage Lenders
When considering the best resources to locate a bad credit mortgage or subprime mortgage lenders, the following are some reasons The Lenders Network was included in this ranking and review.
While some of the names on this subprime mortgage lenders list offer bad credit mortgage options as part of a larger portfolio of loan products, The Lenders Network is unique because providing consumers with links to mortgages for bad credit is its exclusive area of expertise.
Borrowers don’t have to worry about sifting through loan products that won’t work for them because they will only be presented with mortgage loans for bad credit.
It saves borrowers a lot of time, and, while The Lenders Network isn’t one of the direct poor credit mortgage lenders on our list, it provides a streamlined way to source and get in touch with bad credit mortgage lenders.
Whether you’re searching for a mortgage for a bad credit first-time buyer or just general bad credit mortgage loans, it’s important to have the option to compare the products available to you.
The Lenders Network makes this fast and easy. First, consumers fill out a brief questionnaire which is free and requires no obligation for the borrower.
Then, borrowers are referred to no more than three lenders who specialize in offering bad credit mortgage loans. Borrowers can usually expect to receive a response within a few minutes, so they can start the process of finding the right mortgage loans for bad credit incredibly quickly and easily.
In some circumstances, when a borrower submits private information to a site that specializes in connecting him/her with bad credit mortgage lenders, that company will then refer that information to a credit repair company.
The Lenders Network is unique because it guarantees never referring a customer to a credit repair company. Instead, if the consumer is denied a loan from a member of The Lender Network’s group of bad credit mortgage lenders, his/her information is kept private, but the individual can download a free DIY credit repair guide.
In general, The Lender’s Network also doesn’t resell information for months, like many other companies do, so site users won’t receive calls and emails for months from lenders.
The Lenders Network is a unique way for people to search for poor credit home loans and find a specially designed mortgage for a bad credit first-time buyer because it offers not just a simple way to connect with lenders but also a variety of guides and information resources.
Some of these guides focus on certain topics, such as: FHA vs. Conventional Loans – The Difference Between Conventional and FHA Loans.
Other educational resources that might be of value to borrowers looking for mortgage loans for bad credit, available through The Lenders Network, include:
- What Credit Score Is Needed to Buy a House Using an FHA Loan
- Free DIY Credit Repair Guide
- FHA Guidelines on Closing Costs
- VA Home Loan Guidelines
- 10 Tips You Need to Know Before Refinancing Your Mortgage
Conclusion – Top 6 Sources for Bad Credit Mortgage Loans and Bad Credit Mortgage Lenders
Before starting your search for subprime mortgage lenders and resources to find mortgage loans for bad credit, consumers should first be prepared and understand their options. Individuals searching for a bad credit mortgage should look for companies and resources that are compassionate and have a thorough understanding of their situation.
Consumers should also research companies and resources thoroughly since subprime mortgage lenders have a reputation unethical actions in the past, and these mortgages can become incredibly expensive unexpectedly if you don’t work with a reputable company.
The above list is an excellent place to start for borrowers seeking bad credit mortgage lenders. The ranking and review represent a combination of direct poor credit mortgage lenders who offer options such as FHA-backed loans as well as online portals that don’t provide direct lending but instead link borrowers with the best bad credit mortgage lenders and sources to obtain a mortgage with bad credit.
Hope you’ve found this “The Top 6 Subprime Mortgage Lenders| 2016-2017 Ranking and Comparison” article useful.
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TOP BAD CREDIT MORTGAGE LENDERS & PRODUCTS
Finding the Top Bad Credit Mortgage Lenders for Bad Credit Borrowers
How do people end up with bad credit? Will it prevent them from being able to become homeowners?
These are two important questions. The first question has any number of answers. Often, people experience issues that damage their credit through no fault of their own, such as being laid off from their job or having difficulty making payments on time. To answer the second question, bad credit mortgage lenders do exist, making homeownership attainable for almost everyone, regardless of financial history.
Finance companies for bad credit offer mortgages that may have higher interest rates, but they will give that invaluable opportunity to purchase a home that bad credit borrowers might not otherwise be able to access.
So how do you decide among the best mortgage lenders for bad credit? What criteria should you consider?
We created this ranking of the top 5 mortgage products & mortgage lenders for bad credit as a ranking to help borrowers understand the unique differences that make a lender/product a strong option.
As well as featuring mortgage lenders for bad credit, this ranking also includes firms that provide mortgage comparison tools. These firms do not directly offer loans to borrowers but instead connect them with lending companies.
2016 Bad Credit Mortgage Lenders for Bad Credit Borrowers
This list is sorted alphabetically (click any of the below names to go directly to the detailed review for that bad credit mortgage lender):
* 8/4/2016 Note: The Lenders Network has been removed from the list of top mortgage lenders for bad credit borrowers.
The Difference Between Traditional and Bad Credit Mortgage Lenders
Often, one of the biggest questions borrowers have is how mortgage companies with bad credit are different from conventional mortgage companies.
A few distinctions include:
- When a borrower is seen as having a low credit rating, he/she may be offered a mortgage by some companies even after being turned down by conventional providers. However, the stipulation is often that the individual will have to pay a higher interest rate. This is designed as a way to protect against the higher potential for a poor credit borrower to default on a loan.
- Often, loans originating from mortgage lenders for bad credit will have additional fees associated with prepayment penalties.
- Mortgage lenders for bad credit will often charge adjustable interest rates as opposed to fixed rates. The difference is that borrowers may have to pay higher interest rates in the future as there’s no guarantee they’ll stay the same over time.
What Is Considered a Low Credit Score?
Whether or not you’re approved for a conventional home loan or you have to work with bad credit mortgage companies depends primarily on your credit score.
If your score is ranked as being anywhere from poor to fair, you’re likely to be required to work with a mortgage company for bad credit.
Your credit score is usually between 300 and 850, and anything that’s a 601 to 500 or lower is seen as fair to bad.
While a low credit score can be troubling for consumers, they’re not alone. According to Ellie May, a provider of mortgage software, 33% of loans that closed in spring of 2014 were from borrowers with credit scores of less than 700.
Applying for a Mortgage with Bad Credit
When you’re applying with finance companies for bad credit, the process is much the same as it would be to apply for a conventional loan.
It is important to make sure you research bad credit mortgage companies thoroughly because, while there are legitimate and reputable companies who specialize in this area, there are also companies that take advantage of borrowers.
When you’re applying with a mortgage company for bad credit, you should also explore the options. For example, if you’re a bad credit borrower, you might not want to do the traditional 30-year mortgage since you’ll be paying higher interest rates and likely be subjected to adjustable rates. It’s really about finding a balance between a lender that will give you a mortgage and terms you find manageable.
Methodology for Selecting Bad Credit Mortgage Lenders
What methodology does AdvisoryHQ use in selecting and finalizing the companies, services, and products that are ranked on its various top rated lists?
Please click here “AdvisoryHQ's Ranking Methodologies” for a detailed review of AdvisoryHQ’s selection methodologies for ranking top rated companies, products, and services.
Detailed Review – Top Ranking of Bad Credit Mortgage Lenders
After carefully considering bad credit mortgage lenders and online comparison tools, we compiled the following list of the top companies and products. As you continue reading, you’ll find detailed reviews for each of our picks as well as an outline of the factors used in the decision-making process.
Carrington Mortgage Services Review
Carrington Mortgage Services was founded in 2007 and is a subsidiary of Carrington Holding Company, LLC, which is a privately-managed company managing investments. CMS is headquartered in California, and this mortgage company for bad credit has two loan servicing locations.
The mission of everything CMS does is to deliver the highest level of customer service while creating value for both borrowers and investors.
Key Factors That Enabled This Company to Rank as a Top 2016 Bad Credit Mortgage Lender
Below we highlight some of the unique facets of working with Carrington that allowed it to rank on the list of 2016’s top bad credit mortgage lenders.
Carrington Mortgage Services operates from guiding principles centered on concepts of shared responsibility. It defines this in the following ways:
- CMS has a responsibility to its customers to put them first, provide the best advice and solutions, and act with only the utmost in integrity. It’s all of these principles that lead to its delivery of high-level customer service.
- As well as a responsibility to customers, CMS employees maintain a responsibility to one another. They treat their colleagues and coworkers with respect while sharing accountability and responsibility.
- Finally, CMS maintains a sense of responsibility to all key stakeholders by putting long-term interests in front of short-term gains.
Mortgage lenders are expected to uphold the highest level of integrity and also meet an array of standards and protocols as this is a highly regulated industry. To meet those requirements while simultaneously delivering the best possible customer service, CMS invests heavily in the training and development of each and every associate that works for the company.
Associates are enrolled in 80 hours of training which emphasizes corporate values, and they’re continually updated and developed on laws about fair debt collection practices and procedures.
Employees are also trained to guide clients through any questions or concerns they may have regarding their mortgage.
Working Through Hardship
As one of the most respected mortgage companies for bad credit, Carrington bases its work on a concept of “working through hardship.” This means its team is specifically trained to help customers in times of financial challenges and difficulties.
Employees will make every reasonable effort to create payment alternatives, and they will refer clients to HUD-approved credit counselors when relevant.
Solving Complex Challenges
Mortgage companies that work with bad credit must have the expertise and knowledge to approach a variety of very complex challenges, and that’s something CMS offers.
CMS feels each client engagement becomes a partnership leading to success for borrowers.
FHA Loans are an appealing way for bad credit borrowers to obtain a mortgage. An FHA loan is not issued by but is insured through the Federal Housing Administration. Since borrowers pay mortgage insurance, the lender is protected in the event of a default on the part of a borrower. FHA loans are delivered through licensed lenders, and this can include bad credit mortgage lenders.
FHA options are considered one of the best borrowing options for bad credit because consumers with credit scores between 500 and 579 may be accepted, but they will be required to make a down payment of at least 10%. FHA Loans have been issued since 1934.
Cited below are some benefits of an FHA loan.
Credit Score Requirements
This is perhaps one of the number one reasons FHA loans are advantageous for bad credit borrowers. These are one of the easiest types of home loans to qualify for because your credit score can be as low as 500.
The reason bad credit borrowers can take advantage of FHA loans is because they’re backed by HUD mortgage insurance which reduces the risk for the lender associated with defaulting.
Low Down Payments
As compared to most conventional home loans, with an FHA mortgage, you have to pay a relatively minimal down payment, which is one of the other big appealing elements for borrowers.
For most borrowers, a down payment of just 3.5% of the purchase price is required, although, if your credit score is low, you may have to pay a down payment of up to 10%, but that is still comparatively low.
For borrowers who have recently undergone a bankruptcy, the process of applying for a mortgage can be incredibly intimidating. FHA loans are one of the few programs that can take some of this anxiety away for borrowers.
For an FHA loan, borrowers are typically two years out of bankruptcy, but, in some cases, if you’re out of bankruptcy for at least a year, and you can show it was the result of extenuating circumstances, you may still be able to obtain this type of loan.
While this holds a lot of appeal for bad credit borrowers, it’s important to realize there is a significant amount of paperwork involved in applying and being approved for an FHA loan. For those people with past credit problems, the FHA often recommends participating in a Consumer Credit Counseling program to avoid denial.
Since the FHA requires mortgage insurance in order to issue a loan, borrowers may wonder about those payments. An FHA loan is advantageous because it makes the payment of insurance premiums easy. The upfront premium can be financed as part of the overall loan amount, so it’s simply included in your monthly mortgage payment, making it relatively effortless for the home buyer.
LendingTree is an online tool that provides a streamlined way for consumers to receive multiple loan offers by only filling out one form. LendingTree includes a network of lending institutions that are part of its offerings.
This online loan marketplace lets people shop mortgage options – including those mortgage companies that work with bad credit – to find the opportunities that will best suit their needs.
When a user creates a LendingTree account, that individual can also track his/her credit score, which is updated monthly, to see what’s having an adverse impact and where changes can be made to improve his/her score.
Key Factors That Enabled This Company to Rank as a Top 2016 Bad Credit Mortgage Lender
Below we highlight some of the features of using LendingTree that led to its inclusion on this ranking of the top 2016 bad credit mortgage lenders and comparison tools.
Interesting to note about LendingTree is that it’s not actually a mortgage company for bad credit but is, instead, an online marketplace to help customers search for the best possible finance companies for bad credit.
The advantage of this set-up is that borrowers don’t have to take the only offer they think is going to come along and, instead, can do the research required to find the best mortgage lenders for bad credit that will offer terms the borrower finds acceptable.
All a potential borrower needs to do is provide a brief amount of information, and the individual will receive offers. In this way, bad credit borrowers don’t have to go through an exhaustive search.
No Upfront Fees
Not only will LendingTree connect borrowers with mortgage companies for bad credit, but it doesn’t charge any upfront fees either. Some loan comparison and search tools ask users to pay a fee to use their services, but the search for loans on LendingTree is free.
Note, however, lenders are likely to ask for application and processing fees after you accept a loan offer.
LendingTree is a fantastic tool to search for a mortgage company for bad credit, and it also offers an abundance of educational resources, tips, and information for borrowers. These free resources range from articles and lists of tips, on topics such as how to improve your credit score, to financial calculators.
All of these tools, along with LendingTree’s ease of use, make it a great option for a borrower with bad credit who wants to make a strong mortgage decision backed by facts and information.
A Variety of Loan Offers
Using LendingTree to find the best mortgage lenders for bad credit is not only easy, but you can also choose the type of loan that meets your needs.
LendingTree offers users the opportunity to select a federally-insured FHA loan provided by an approved lender, a conventional loan adhering to Fannie Mae guidelines, or, if applicable, a VA loan available to veterans and current military service members.
Other types of mortgage programs available through LendingTree include:
- Fixed rate
- Adjustable rate
- Conforming or jumbo loan amounts
- Government or conventional
- Prime or sub-prime
- Traditional or reverse
- Construction or permanent
First or second mortgage
LoanLeaders of America Review
LoanLeaders of America is a direct mortgage lender that specializes in offering structured, tailored loans to individuals. LoanLeaders is widely considered as one of the best mortgage lenders for bad credit, and it can help borrowers overcome many challenges.
LoanLeaders has experience in FHA loans, VA loans, and conforming and jumbo loans. It’s also particularly specialized in the provision of niche products.
Key Factors That Allowed This Company to Rank as a Top 2016 Bad Credit Mortgage Lender
Below we cite a few factors weighing into the decision to name LoanLeaders as one of 2016’s top finance companies for bad credit.
There are no two consumers or mortgage borrowers that are exactly the same, and it’s from within that framework that LoanLeaders approaches their services and offerings.
Rather than looking at every client engagement as being the same, LoanLeaders focuses on the delivery of specialized and personalized loan services.
If you're searching for bad credit mortgage companies that will look at your unique circumstances and then help you to uncover the best possible home loan, that company is likely to be LoanLeaders. This is of particular importance for consumers seeking mortgage lenders for bad credit because it can be so complex to find a loan based on your past financial history.
These are challenges well understood by the LoanLeaders team, and this is an area it’s very experienced in dealing with.
When you turn to LoanLeaders as your choice for the best mortgage lender for bad credit, you’ll discover that not only will you receive customized service taking into account your finances and needs but also that it’s a simplified process to work with this company.
LoanLeaders calls the process “trouble-free mortgage loans,” and the goal is to find competitive rates and beneficial products all in a way that’s efficient and practical.
Free Loan Advice
Finding the right loan is not easy, and that’s particularly true for borrowers seeking the best mortgage company for bad credit. That’s why LoanLeaders makes it its mission to create a partnership with clients.
Part of the partnership is the provision of free, no-obligation mortgage loan advice. This national, no-fee debt lender can provide you with guidance to help you make the right choices without charging a fee.
In addition to its free loan advice, LoanLeaders is also an excellent source of educational materials through its in-depth Knowledge Base, with guides to almost anything you could need to know about borrowing or buying a home.
Thanks to the level of personalization and top-quality customer service provided by LoanLeaders, its goal with client engagements isn’t just to get a loan for borrowers with bad credit. It’s also to help these borrowers re-establish their credit and get on the path to a strong financial future.
That’s an important part of what LoanLeaders offers, as it does specialize in being a mortgage company for bad credit.
Sebonic Financial Review
An innovative startup, the goal at Sebonic Financial is to cultivate a new approach and culture surrounding home loans. This mortgage lender is based in Charlotte, NC and is a division of Cardinal Finance Company, a mortgage banker in operation since 1987.
Sebonic Financial is an approved lender for Fannie Mae, Freddie Mac, and Ginnie May, and Cardinal is also an approved lender for HUD, FHA loans, and VA loans.
Key Factors That Enabled Us to Rank This Company as a Top 2016 Bad Credit Mortgage Lender Comparison Tool
Below are highlighted some of the advantages of Sebonic leading to its inclusion as one of the top bad credit mortgage lenders or loan comparison tools.
Everything Sebonic does for clients is uniquely guided by a set of defined core principles that allow it to provide the best possible service and solutions, even for those borrowers seeking mortgage lenders for bad credit.
These principles include the following:
- Respect: Sebonic will respect your trust and privacy, operate with honesty, and make collaboration easy and beneficial for everyone involved. Sebonic also ensures working with its company is convenient, and your information always remains safe and secure.
- Simplicity: Finding a home loan, particularly when you’re seeking the best mortgage lender for bad credit, can seem incredibly complex. That’s why simplicity is key to what Sebonic does. Sebonic will keep you updated of where you are in the process and outline everything you need to complete your home loan.
- Technology: A big advantage of working with Sebonic is its reliance on streamlined advanced technology, which offers accuracy, convenience, speed, and cost-efficiency.
- People: While technology is central to what Sebonic does, so are people. This pick for one of the top mortgage lenders for bad credit relies on person-to-person interactions and conversations to guide you through the process of obtaining a loan.
- Quality: Quality of service is central to a good loan process, and Sebonic understands that importance.
- Efficiency: Through the use of automated processing, your loan will move through each of the steps faster than what you’ll find with many of Sebonic’s competitors.
- Low Cost: The efficient approach offered by Sebonic leads to lower closing costs and monthly payments for borrowers, including those borrowers looking for bad credit mortgage lenders.
As mentioned above, one of the distinctive features of working with Sebonic Financial is its easy process to obtaining a home loan.
The process requires minimal steps, which include the following:
- Research your loan: Choosing which home loan offer to go with is a significant decision. Sebonic encourages borrowers to learn as much as possible about its loan, including not just the interest rate and monthly payment but also what the included fees will be. Loan consultants will work with borrowers to explain options in a high degree of detail yet in terms you can understand.
- Apply: Once you’ve worked with a Sebonic representative to explore the ins and outs of your loan, you’ll apply. The Sebonic team will walk you through the process, and the questions are so simple that this part of the process takes most applicants only about 30 minutes to complete.
- Collect documents: This is an essential and critical part of the process, and there can be special required documents if you’re a bad credit borrower. Sebonic will walk you through exactly what you need and give you a customized checklist to speed up loan processing time.
Once you’ve completed the above steps, Sebonic will make sure no changes or updates are needed and will work to move your loan along smoothly from start to finish.
Constant Communication and Collaboration
Whether you’re searching for finance companies for bad credit or companies offering conventional loans, it can be an exhausting and complicated process. Borrowers often feel like they’re left out of the loop during the application process. They may not know exactly what documents are needed until the last minute, or they may not be regularly updated on the process of their application.
This is somewhere Sebonic excels, and that’s the provision of continual communication and updates. Borrowers are never left guessing what they’ll need to submit or where they stand in the process, thanks to the dedicated customer service team.
A vital component of how Sebonic delivers such top-quality service to borrowers is through its talent management strategy. Sebonic is a leader among mortgage companies for bad credit because it encourages good work-life balance for employees, selects experienced leaders in the industry, and listens to one another and collaborates on ideas.
The Lenders Network Review (Removed from the List)
Much like LendingTree, The Lenders Network isn’t a direct mortgage company for bad credit but is instead a comparison tool that borrowers can use to explore their options and then apply for the loan that best suits their individual needs. The Lenders Network makes it easy for buyers by having them apply and then mortgage companies contact them, rather than vice versa.
Update: 8/4: The Lenders Network has been removed from the list of top mortgage lenders and products for bad credit borrowers.
Conclusion – 2016 Top Bad Credit Mortgage Lenders and Mortgage Comparison Tools
Seeking mortgage lenders for bad credit isn’t without challenges, but it’s also not an impossibility. The companies and loan products represented on the ranking above reflect both the best mortgage lenders/products for bad credit consumers as well as online portals that connect borrowers with finance companies for bad credit.
Each of the names on the ranking signifies a company or a product with excellent offerings and customer service as well as a dedicated consideration to the specific needs of those borrowers who have less-than-perfect credit.
They’re also companies that are leaders in the overall mortgage industry, creating excellent resources for borrowers who may be questioning their ability to obtain home loans because of their financial history.
If you have questions, comments or tips about this “Top and Best Bad Credit Mortgage Lenders & Products for Bad Credit Borrowers (2016 Mortgage Lenders and Programs)” article, send us an email. Also, follow us on social media to be the first to hear about major economic news stories.
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